Health Diagnostics Laboratory and Singulex Inc. Settle False Claims for $48.5M; Whistleblower Awards TBD

Posted: 04/10/2015  browse the blog archive
Health Diagnostics Laboratory and Singulex Inc. Settle False Claims for $48.5M; Whistleblower Awards TBD

Virginia-based Health Diagnostics Laboratory Inc. (HDL) and California-based Singulex Inc. have agreed to pay $48.5 million to resolve allegations that the companies violated the False Claims Act and the Anti-Kickback Statute by paying remuneration to physicians in exchange for patient referrals and billing federal health care programs for medically unnecessary testing, the Department of Justice announced yesterday.  The government also intervened in the lawsuits as to similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc., and its owners, Floyd Calhoun Dent and J. Bradley Johnson; and former CEO Latonya Mallory of HDL.

HDL, Singulex and Berkeley allegedly induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles.  In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex.  As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.  

As part of the settlements, HDL and Singulex have agreed to enter into separate corporate integrity agreements with the Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  Those agreements provide for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to these settlements.

The lawsuits were filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam, or whistleblower, provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The whistleblowers’ share of the settlements has yet to be determined.  The act also permits the United States to intervene in and take over a whistleblower suit, as it has done in part in the three actions. 

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.